Locum Insights


Spending Review: Self-employed to have expenses restricted

Government will legislate to restrict tax relief for travel and subsistence expenses for self-employed

Published on 25th November 2015

George Osborne

Locum workers will have their travel and subsistence expenses restricted, it has been confirmed in the Spending Review announced today.

Chancellor George Osborne revealed that as outlined in the Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company.

“Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016,” the chancellor said.

Central government grants to local authorities will also reduce, it emerged in the Spending Review.

Chancellor George Osborne stated that: “The Spending Review makes the difficult decisions to significantly reduce the central government grant to local authorities, while introducing a new council tax precept for social care, and undertaking the full devolution of business rates and new responsibilities so local areas have the tools to drive local growth.”

Councils will be able to add 2% on council tax to pay towards social care in their areas, if they wish, George Osborne revealed. If all local authorities did this, it would help raise nearly £2 billion a year by 2019-20.

The chancellor added that from 2020, they will also be able to keep money from business rates collected from shops and businesses, to spend on local services like street repairs, libraries and transport.

From 2017 the Spending Review makes available social care funds for local government, rising to £1.5 billion by 2019-20, to be included in an improved Better Care Fund.

“Taken together, the new precept and additional local government Better Care Fund contribution mean local government has access to the funding it needs to increase social care spending in real terms by the end of the Parliament. This will support councils to continue to focus on core services and to increase the prices they pay for care, including to cover the costs of the National Living Wage, which is expected to benefit up to 900,000 care workers,” the chancellor said.

He added that following the introduction of the Care Act, the Spending Review includes over £500 million by 2019-20 for the Disabled Facilities Grant, which will fund around 85,000 home adaptations that year. This is expected to prevent 8,500 people from needing to go into a care home in 2019-20.

Local police and crime commissioners will also have the ability to raise local council taxes. Council tax is currently made up from money that goes to local services like police and fire services as well as local councils. From next April, police forces will be able to increase the amount they require from council tax collections by 2%.

The Spending Review sets out how £4 trillion of government money will be allocated over the next five years and the government said it will prioritise defence, NHS and housing.

The chancellor revealed that last year, the deficit was halved compared to its 2009 to 2010 level and stated that by next year, it will be down by three quarters. He pledged that over the next four years, the deficit will have been eliminated and the government will be running a surplus of £10 billion by 2019-20.

Half a trillion pounds will be spent on the NHS. NHS England will receive £10 billion more a year in real terms by 2020 than in 2014-15 to fund 800,000 more operations and treatments, 5.5 million more outpatient appointments and 2 million more diagnostic tests. Access to GP services in the evenings and at the weekend will also be introduced and there will be seven-day access to hospital services by 2020.

Health and social care will be integrated across England by 2010, joining up services between social care providers and hospitals. This will mean that health and care will feel like a single service for patients.

The cap on the number of nurses and midwives that can go into training each year will be removed, providing up to 10,000 more nurses and other healthcare professionals for the NHS. These students will be able to receive 25% more financial support during their studies as a result.

From 2020, people with suspected cancer will be diagnosed or given the all clear within 28 days of being referred by a GP, helping to save up to 11,000 lives a year. Over £500 million will also be spent on new hospitals including in Cambridge, Brighton, and Sandwell.

The government will protect overall police spending in line with inflation – an increase of £900 million by 2019-20 and additional funding will be provided for forces who have strong proposals to support efficiency and reform.

Schools funding will also be protected in line with inflation and £23 billion will be invested in school buildings, creating 600,000 extra school places and 500 free schools.

The government also pledged to introduce a ‘tampon tax’ so VAT from the sale of women’s sanitary products will go to women’s health charities.

At the Summer Budget it was announced that three million new apprenticeships will be created by 2020, funded by a levy on large employers. The apprenticeship levy will come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill.

Holloway prison will also be closed to enable women prisoners to serve their sentence “more humanely”.

The Spending Review and Autumn Statement is available in full here.

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